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Saturday, October 31, 2015

Giants of Asia in Silicon Valley

Prime Minister Narendra Modi and President
Xi Jinping have just made back to back visits to the United States. In keeping
with the times both began their tours from that Mecca of our age —Silicon
Valley. Thereafter their paths diverged because Xi was on his first state visit
to Washington DC, whereas Modi, on the annual pilgrimage the Indian PM makes on
the occasion of the UN General Assembly, had a brief meeting with Obama in New
York City.

PM
Narendra Modi and Chinese President Xi Jinping both are visiting the US
at a time when they have important political preoccupations back home. -
See more at:
http://www.mid-day.com/articles/giants-of-asia-in-silicon-valley/16568194#sthash.Tdn8qdFj.dpuf

PM
Narendra Modi and Chinese President Xi Jinping both are visiting the US
at a time when they have important political preoccupations back home. -
See more at:
http://www.mid-day.com/articles/giants-of-asia-in-silicon-valley/16568194#sthash.Tdn8qdFj.dpuf

Both were competing with yet another
international star for the attention of the American media—Pope Francis. But
for both Xi and Modi, the real target was not the US but the audience back
home.

The reason is that the other thing
that unites the two Asian giants is that both are visiting the US at a time
when they have important political preoccupations back home. It is not just the
Bihar election that demands Modi’s attention in India, it is the failure of his
government to take concrete steps to make India a more business-friendly
destination. True, the Indian economy is one of the few in the world that is
growing and that FDI to India has gone up in the past year. But it is also a
fact that a slew of measures to make high economic growth sustainable remain to
be taken. The government has abandoned plans to pass a bill to ease land
acquisition, a Goods and Service Tax (GST) is yet to be implemented, statutes
to end retrospective taxation and ease labour laws is yet to reach Parliament.

As for Xi, the recent stock market
crash and the bungled response of the government has taken away some sheen from
China’s economic growth story. Meanwhile he is finding it difficult to push the
reform of state owned enterprises (SOE), the key to rebalancing the Chinese
economy. A proposal to reform the SOEs was unveiled on the eve of the Xi visit
but they have proved to be a damp squib. A proposal for drastic reforms of the
Chinese military was expected to be unveiled on September 10, but that, too,
has not happened.

The economic troubles could well
lead to the Communist party leadership taking recourse to nationalist displays,
as manifested by the huge military parade to celebrate the 70th anniversary of
the defeat of Japan in World War II. This was clearly intended to burnish Xi’s
aura. In the US, Xi signed an important agreement with the US committing both
sides not to undertake cyber espionage. In the context of the forthcoming Paris
Conference on Climate Change, President Obama gained an important commitment
from Xi on China’s commitment to take drastic measures to limit emissions.

This said, actually even host
America is in a somewhat distracted state. President Obama is lame duck and the
2016 Presidential election campaign has more or less begun. The state of
American politics is parlous, with outliers like Donald Trump and Bernie
Sanders leading the Republican and Democratic fields respectively. The
anti-establishment mood is so strong in the country that it has led to the
resignation of US House Speaker John Boehner who was fed up by the actions of
the hardliners in his party who are infuriated over their inability to push
their anti-Obama agenda.

In all fairness, it is early days
for Modi, he has just about finished the first year of government and all said
and done, India’s economy still remains on the growth track. The Prime Minister
remains personally popular and his party is expected to win the Bihar state
assembly elections scheduled for next month. In contrast the Opposition remains
divided and uncertain and its biggest party, the Congress, remains directionless.

But even so, there is need for Modi
to understand that grand-standing in the Silicon Valley and supping with
American CEOs will not bring India American investment. That will only happen
when things happen on the ground and India moves up in the list of ease of
doing business. That, in turn, is a task that cannot be achieved by Modi and
his PMO alone, he needs to galvanise his government and its ministers who as of
now are a bunch of faceless men and women who even the average newspaper
reading person will not be able to mostly recognise.

All said, the Modi government needs
to move from its penchant for event management and exhortation, to delivering
on what brought them to power in the first place — the promise of a economic
transformation of the country.